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Analysts at Goldman Sachs began coverage of the video game sector with an Attractive view, saying publishers are "in the midst of a renaissance."

Video game publishers are in the process of shifting themselves to become a more predictable, higher margin and cash-generative story, Goldman Sachs' Christopher Merwin commented in his initiation note. In fact, this transition story is still in the middle stages and will be supported over time through greater player engagement, a shift to digital monetization and platform diversification.

On average, video game publishers could see their levels of full game downloads to rise from 22 percent in 2016 to 42 percent in 2019, the analyst continued. On average, digital revenue will also rise from 59 percent of total revenue in 2016 to 80 percent in 2019.

Merwin initiated coverage of Electronic Arts Inc. (NYSE: EA) with a Buy rating and $136 price target. The stock was also added the stock to Goldman Sachs' "Americas Conviction List."

EA's stock has lagged some of its peers as of late yet but the company is close to a positive revision cycle starting in fiscal 2018 and continuing through at least fiscal 2019 at which point its earnings growth will reaccelerate to 22 percent or higher.

EA boasts a stronger product slate compared to its peers and should soon see the benefit of in-game monetization for its first-person shooter and action games which could add at least $1.50 in earnings per share in the coming years, the analyst noted.

Take-Two Interactive

Merwin initiated coverage of Take Two Interactive Software Inc (NASDAQ: TTWO) with a Buy rating and $118 price target.

Take-Two is about to enter a "sweet spot" of game releases, which is expected to result in positive earnings revisions, the analyst noted. Of particular note, the company is investing in new content for its popular "Grand Theft Auto" franchise and simultaneously monetizing "Red Dead."

The company is also sitting on $1.3 billion in cash, which represents 11 percent of its market cap and can be allocated toward accretive acquisitions or buying back its own stock.